In the current climate, cross-border retailers are feeling unsettled as the trade negotiations are set to begin between the UK and the EU. With a “hard Brexit” on the cards and the recent general election, this unease isn’t surprising. Fortunately, changes over the past year made selling to the US simpler.
This is due to the increase in the de minimis customs value. As well as explaining what the de minimis value is, I’ve outlined below some ways you can capitalise on this change, and expand your customer base by selling to the US.
What does it mean?
The de minimis customs value is the amount Americans can import free of duties and taxes. In 2016, this figure was increased from $200 to $800 after remaining the same for 20 years. UK businesses can therefore avoid tariffs previously in place for parcels over $200 when shipping parcels into the US, making cross-border selling easier – and far more appealing.
For companies already selling to the US, this is a great opportunity to sell higher-end products and grow your customer base. Alternatively, for those who haven’t yet taken the plunge, this could be a time to consider looking at the possibility of expanding to the States.
Avoid the admin headache
The rise in the duty-free value of exports to the US opens up real possibilities for SMEs and independent retailers based in the UK.
One of the reasons for this is simply that this increase will mean far less admin for businesses shipping parcels into the US; parcels meeting the de minimis value avoid the formal customs paperwork required for products exceeding the value.
This makes America a much more attractive market for retailers already selling stateside, as well as those just starting out.
It has never been easier for consumers to shop internationally; now with a simple click, a US shopper can “enter” any online British store. US consumers who may have previously been careful not to exceed the $200 threshold can now buy with more freedom.
With consumers willing to buy more, sellers need to capitalise on this and provide buyers with more products overall, as well as items which exceed the $200 dollar mark alone.
Many retailers who avoided the US altogether previously because of the prior limit level may see this as an excellent opportunity to extend their customer base. Upping the de minimis value will give current cross-border sellers the chance to sell higher-value products to the US.
Sellers already working in the States, who may have been reluctant to make these products available due to the complicated set of duties and processes, can now extend the product lines available to their buyers.
Communicate with your customers
Effectively explaining the delivery process to buyers – current and new – is key to improving the purchase experience and securing a loyal, satisfied customer base. This is reinforced by research we conducted in 2015 showing that 43 per cent of people abandoned an online purchase at least once in a six-month period due to logistical reasons such as delivery time and flexibility.
It doesn’t stop there; research also showed that 40 per cent of shoppers also fail to complete a purchase because the cost of delivery is too high. With fewer border charges in place, retailers can afford to be more competitive in their delivery options and prices.
With the arrival of the de minimis value increase, shipments to the US can be made more easily and avoids costly customs delays. Ultimately, UK retailers who take steps to clearly communicate these changes to both existing US customers and new first time buyers, will undoubtedly reap the benefits.
Mark Bellamy is director of B2C Europe